Internet firms drop suit, but state says it will seek new ways to regulate games.
State officials have abandoned their attempt, at least for now, to prevent Minnesotans from gambling online.
A group of Internet service providers withdrew a federal lawsuit against a senior state law enforcement official Monday after he withdrew a request that service providers block access to hundreds of online gambling sites.
"Whether or not [the service providers] ultimately would have prevailed in court is unknown," John Willems of the Minnesota Department of Public Safety's Alcohol and Gambling Enforcement Division wrote in a letter. "I believe it may be more appropriate to resolve this problem by working to create clear and effective government policies concerning regulation of gambling."
Minnesota had contended that all online gambling conducted in the state is illegal, even if the games are hosted overseas. Operators of these types of sites are most commonly based in the United Kingdom and the Caribbean.
Willems' division gave written notices in April to AT&T Internet Services, Charter Communications, Comcast Cable, DirecTV, Dish Network, Embarq and Sprint/Nextel, Frontier Communications, Qwest, Verizon Wireless and Wildblue Communications.
In response, the Interactive Media Entertainment and Gaming Association (iMEGA) filed suit last month in federal court in Minneapolis, seeking to prevent the state from enforcing its order.
"Broadly, it's a victory for Internet rights because what you had was a government administrative branch deeming a list of sites to be a black list that should be censored," said Joe Brennan Jr., the industry group's chairman. "It was preventing Minnesota residents from freely accessing the sites."
The association's suit contended that Minnesota lacks the authority to compel the Internet service providers (ISPs) to block residents' access to the sites and that its actions violate constitutionally protected free speech rights.
The group, based in Washington, D.C., also sent letters to each of the ISPs contacted by Minnesota, contending that the state erred in citing a federal law from the 1960s regarding the use of telephone and telegraph wires for the transmission of illegal wagers.
After lawyers negotiated, the association agreed to drop its suit after Willems agreed to send his letter to the service providers, said John Borger, an attorney for the plaintiffs.
Bryan Mileski, president and publisher of Minnesota Poker magazine, said the state's move doesn't change much for the 100,000 Minnesotans he estimates play poker online. Thousands more bet on sports events online and play games of chance at online casinos, he said.
Mileski said online poker is legal and should be protected by free speech rights. He said he believes the state action reflected the fact that it gets no proceeds from online gambling, while it benefits from lotteries and supports casinos.
Most poker websites operate outside the United States and manage bets through cash accounts operated by mail, Mileski said. U.S. banks are prohibited from processing overseas online gambling transactions.
"If I want to play poker with people around the world, why can't I?" Mileski added. "I can play chess."
As for the state's next step, "we have not folded our hand," said Andy Skoogman, a Department of Public Safety spokesman. He said he expects new strategies for regulating Internet gambling to emerge.
"The action raised awareness of the broader issue about who is policing the Internet and protecting the consumer," he said. "At this point, we don't feel there is anybody. This is an issue that every state is going to face sooner rather than later."
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